In the aftermath of the landmark deal between the Independent Development Corporation (IDC) and the Vision Sugar consortium, interested parties and key roleplayers in the sugar industry believe diversification will not only save thousands of jobs but will also propel the sector to significant growth.
Inkosi Malusi Zondi, one of the key negotiators who helped to broker the deal to save sugar giant Tongaat Hulett (THL), said the sector must not rest on its laurels. Zondi was assigned by AmaZulu king MisuZulu kaZwelithini to lead the delegation spearheading talks to save the company from potential collapse.
“I’m excited to note that Vision Sugar Group has put diversification at the top of its agenda,” he told the Mail & Guardian. “All stakeholders in the sugar value chain should rally behind this plan.
“It will save and create more jobs in the sugar industry. Other sugar-producing nations such as India are rapidly transitioning from conventional sugar production into integrated biofuels refineries.”
He said India’s aggressive shift away from a narrow focus on sugar production towards diversification had seen its mills converted to produce ethanol, among other products.
“In these mills which were previously strict for sugar production, they are now producing other products from sugarcane such as compressed biogas and other bio-based chemicals.
“This is not only assisting in sustaining jobs in the sugar industry, but it is also supporting India’s clean energy vision. India is not the only country, which is turning fortunes around through diversification. Other countries are following suit. Nothing is stopping South Africa from doing the same.”
Zondi, who was recently appointed as the head of economy and cultural envoy on behalf of the Zulu Kingdom, said that the sugar sector could not be allowed to fail because it is the backbone of the rural and township economy. His new role pertains to driving economic investments in hostels and townships.
“Vision Sugar Group and other stakeholders pulled out a stellar performance,” he said. “The King has expressed his gratitude because the sugar industry is a mass employer, especially in KwaZulu-Natal. We must put all hands on deck to keep the sector sustainable and drive new jobs.”
The proposal also forms a key integral part of the new plan by Vision Group who maintains that sugar alone is not the answer, according to businessperson Robert Gumede, one of the owners of the Vision Sugar Group.
“Vision’s strategy for the Tongaat Hulett assets includes generating electricity from bagasse, which is sugarcane residue, for the national grid and the Durban municipality, as well as a shift toward high-value ethanol production,” said Gumede.
“These are not speculative ideas. They are commercially viable diversification strategies that can reduce dependence on volatile export sugar markets and create new revenue streams,” he said.
Gumede, however, insisted that the diversification plan required regulatory support and licensing frameworks. “In some cases, it requires offtake agreements with state entities. The government needs to fast-track these enablers, not slow them down.”
The push for product diversification is also at the heart of phase two of the Sugarcane Value Chain Masterplan 2030, which was officially signed by government and industry stakeholders recently in Durban.
Zuko Godlimpi, the deputy minister of department of trade, industry and competition (DTIC), said there is also a need to reposition sugarcane “from being seen purely as an agricultural product to an engineered one, which can drive future employment opportunities and enable progress towards more sophisticated outputs such as fuel resources.
“The signing of the masterplan signals the end of the notion that the sugar industry was forever in perennial crisis. The DTIC was committed to accelerating growth and improving diversification through social impact.”
The sugar industry forms the backbone of the rural economy in KwaZulu-Natal and the Mpumalanga Lowveld region. In both provinces, the sugar belt contributes more than R25 billion annual revenue to the country’s economy.
KwaZulu-Natal is the highest contributor, at R18.8 billion, while Mpumalanga contributes about R6 billion. The sugar value chain supports more than 15 000 small-scale growers and employs more than 250 0000 people.